Regulation (EC) N°1370/2007 on public passenger transport services by rail and by road defines rules on how to contract for the provision of public transport services by rail, metro, tram or bus, how to award these contracts and how to compensate for public service obligations. The Commission is now enhancing legal certainty for all actors in public transport by providing guidelines on key provisions of the Regulation.

1. Why are interpretative guidelines needed for Regulation 1370/2007?

The Regulation was adopted in 2007 after about 10 years of preparation and negotiation. It has been in force since December 2009. During the negotiations, it proved very difficult to find a political compromise on some provisions of the Regulation which are, as a consequence, not always clear and sometimes open to different interpretations.

In 2011, the Commission commissioned an assessment of the implementation of the Regulation, which showed that the regulatory and contractual practices vary considerably due to diverging interpretations of certain provisions of the Regulation1. In addition, existing public service contracts do not yet respect all EU rules.

There is a significant need for guidance on the interpretation of various provisions of the Regulation in view of ensuring that future contracts will be compliant with EU rules on the award of public service contracts and on state aid (e.g. related to the definition of Public Service Obligations, rules on compensation, possibility of subcontracting by the operator to which a contract has been directly awarded, definition of the internal operator to which contracts may be awarded directly, rules on transitional periods).

Legal clarification has also been underlined forcefully by participants representing all groups of stakeholders at an international workshop that the Commission organised on 14 November 2011 on the implementation of the Regulation2. Organisations and associations such as, for instance, the EIB (European Investment Bank), ETF (European Transport workers), EPTO (European Passenger Transport Operators), UITP (International Association of Public Transport), CEEP (European Centre for Employers and Enterprises providing Public services) and CER (Community of European Railway and Infrastructure companies) strongly supported the idea of Commission interpretative guidelines on the Regulation.

2. What provisions do the Commission's interpretative guidelines cover?

The guidelines cover those provisions that have been signalled to the Commission as being unclear. These points have been brought to the attention of the Commission for instance through questions from MEPs and complaints, as well as through queries from market stakeholders, national authorities and legal counsels in Member States.

In particular, the guidelines cover the definition of public service obligations and general rules, the duration and subcontracting of public service contracts and social protection in the case of a change of operator. The guidelines also cover the conditions of competitive awards and of direct awards of public service contracts, the rules on compensating public service obligations to ensure that markets are not distorted and public money spent efficiently. Finally, the document covers transparency rules and transitional arrangements in the Regulation.

3. What will be the impact of these guidelines?

The guidelines simply provide guidance for implementing existing requirements, which have been adopted by the European Parliament and the Council.

Therefore, they will not imply any costs to stakeholders as they will not - and cannot - create new obligations. They do not modify the existing rules but aim at facilitating the implementation of Regulation 1370/2007. In fact, they will only generate benefits in terms of increased legal certainty.

4. Are the guidelines coherent with the proposed revision of Regulation (EC) No 1370/2007 in the framework of the 4th railway package?

The guidelines have a different objective (i.e. interpretation of existing law) than the proposed amendment of Regulation 1370/2007 in the framework of the 4th railway package (i.e. opening of the market for domestic passenger transport by rail) (see IP/13/65). However, there are a few overlaps (e.g. the possibility of a direct award of a public service contract in rail, the definition of local competent authority, rules on the transition period) and hence the Commission has sought for full coherence between the texts of the two documents. If the European legislator endorses the Commission's proposals of the 4th railway package, it could well be that certain provisions of the interpretative guidelines would not be relevant anymore. The European Commission will then inform stakeholders accordingly.

DLA Piper, Study on the implementation of Regulation (EC) N° 1370/2007 on public passenger transport services by rail and by road, 31 October 2010, published at http://ec.europa.eu/transport/modes/rail/studies/rail_en.htm